Orthofix Medical Inc. Q3 FY2024 Earnings Call

Good morning and welcome to the OrthoFix 3rd Quarter 2024 Earnings Call. I am Franz and I'll be the operator assisting you today. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would like to turn the call over to Julie Dewey. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the OrthoFix Third Quarter 2024 Earnings Call. We appreciate you joining us. I'm Julie Dewey, OrthoFix's Chief IR and Communications Officer. Joining me today on the call are President and Chief Executive Officer Massimo Calafiori and Chief Financial Officer Julie Andrews. Before we get started, please note that our earnings release and the supplemental presentation accompanying this call are available on the events and presentations page of the investors section of our corporate website at orthofix.com. We will be referring to this investor presentation during this earnings call, so I encourage you to download it for easy reference. Also, this call is being broadcast live over the internet to all interested parties, and an archived copy of this webcast will be available in the Investors section of our corporate website shortly after the conclusion of this call. During this call, we will be making forward-looking statements that involve risks and uncertainties. All statements other than those of historical facts are forward-looking statements. We do not undertake any obligation to revise or update such forward-looking statements. Factors that could cause actual results to differ materially are discussed in our most recent filings with the SEC and may be included in our future filings with the SEC. In addition, on today's call, we will refer to various non-GAAP financial measures. Please refer to today's news release announcing our third quarter 2024 results for information regarding our non-GAAP results, including our reconciliation of these non-GAAP financial measures to our U.S. GAAP results. Additionally, all revenue percentage changes discussed will be on a constant currency, year-over-year basis, and all results of operations that we will refer to will be on a non-GAAP, as-adjusted basis. With that, I will now turn the call over to Massimo.

Thank you, Julie. Good morning, everyone, and thank you for joining us for our third quarter earnings call. I'll spend some time providing business updates and outlining our long-term strategic initiative, before I turn it over to our CFO, Julie Andrews, to cover the specifics of our Q3 results, guidance, and our new three-year financial goals. The third quarter represents an important inflection point in this new chapter for orthofix, including record performances in our USA Orthopedics business and in the number of 7D earn-out agreements. We also matched our record for the highest number of 70-unit placements in any quarter to date and keep seeing strong demand for our spine succession products. As shown on slide 5, we continue to deliver above-market growth led by strengths in our USA markets. The entire company is focusing on innovation and responsible growth. We had another quarter of strong adjusted EBITDA margin expansion, with positive free cash flow of $5.9 million, reaching this significant milestone earlier than we expected. All of this keeps us on a clear course to achieve our 2024 financial targets. Our operating and financial discipline allows our team to execute on our key growth initiatives and reinvest in our innovation priorities. I can confidently say that the business fundamentals are excellent and we have positive momentum to continue leveraging our strategic advantages in 2025 and beyond. Our third-quarter net sales results of $196.6 million represents year-over-year growth of 7% on a constant currency basis. Growth was led primarily by trends in our U.S. Spine Fixation and Bone Growth Therapy, or BGT, businesses, as well as continued market penetration in U.S. orthopedics. U.S. spine fixation had an outstanding quarter and grew 18%, more than triple the market rate, with healthy double-digit growth across all three of our franchises, cervical fusion, interbody, and thoracomal fixation. Revenue growth was driven by continuous strong market demand of the recently launched Reef and Waveform interbody products, along with the onboarding of new Experience Distribution Partners. More specifically, our ALIF, LATERAL and MIS portfolios all grew in excess of 35% and significantly outperformed the market due to increased focus on procedural selling. New product introductions are a driving force and continue to open doors to new surgeons. The combination of our access instrumentation, 7D, our biologic portfolio and the new interbody designs that features orthofix proprietary advanced surface technologies is supporting our differentiation in the marketplace. We are committed to our surgeons and patients that look to our technology to increase speed, improve accuracy, and advance outcomes. BGT grew 9% overall and 13% in fracture, further highlighting the benefit of cross-selling in our integrated spine and orthopedics channels. We already hold the number one market share position in BGET Spine Market and continue to take share with more than 50% of the growth coming from new customer acquisitions. In addition, investment in the fractured market sales channel drove 13% growth in BGT fracture with the Axel Stim bone growth therapy device continuing to outperform the market. As a reminder, the fractured market represents an opportunity of more than $200 million and we are still in the very early innings of building our position in the market, with a clear goal to become the number one player. U.S. Orthopedics benefited from strong execution and grew 15%. Growth was led by the combination of our True Lock and Fitbon products, as well as growth in the Oscar product family, which facilitates the removal of bone cement during joint revision. As a result, I am happy to report that our USA Orthopedics business delivered a record revenue quarter. In enabling technologies, we entered into a record number of 70 flash navigation system earn-out agreements and matched the record for the highest number of 70 unit placements in any quarter to date. We are leveraging our differentiable platform to create long-standing relationships with our surgeon partners. In addition to reiterating our full year 2024 financial guidance, we are also introducing our new 2027 financial targets, which reflect our confidence in sustainable growth trends, the strength of our differentiated and expanded product portfolio, which continues to win share, and our commercial strategy and focus execution. Julie Andrews will discuss this in detail later in the call. I believe we are very well positioned to accelerate our positive momentum and delivery on our commitment to drive discipline, profitable growth, and innovation while increasing long-term shareholder value. In summary, I am pleased with our third-quarter performance and remain optimistic about the opportunities ahead. It is clear that OrthoFix's focus on executing a clear strategy for profitable growth is delivering compelling results. Through our focus on bringing to market a comprehensive portfolio of transformative solutions and delivering unmatched customer service, which collectively are helping us drive more profitable sales. We have significantly improved our operating and financial position and paved the way for sustainable growth. As we look to 2025 and beyond, we plan to build on our progress by 1. Further sharpening our commercial focus and discipline for margin expansion. 2. Continue to innovate our enabling technology platform to support our renewed focus on spine deformity and 3. Ensuring we are well positioned to create value for our shareholders over the long term. As outlined on slide 8 in the presentation, we have continued to successfully execute this transformative agenda and are now at an inflection point in our journey that is focused on strategic innovation and operational and financial discipline. With our world-class executive leadership team in place and reinvigorated by our new vision and mission, it's time to introduce our long-term strategy and financial goals, which built on our strong foundation and set us on a clear course for profitable growth. I would like to provide more detail on the multiple levers and vital few initiatives in our long-range plan that we believe will fuel profitable growth and propel our business forward. These include an innovation focus and continued development of differentiated products to meet diverse surgeon preferences, commercial strategy enhancement to drive deeper market penetration through comprehensive portfolio offerings, Technology leadership that harnesses advanced systems for improved surgical outcome efficiencies. Emphasis on high-quality revenue streams and operational excellence for growth sustainability. And disciplined cash flow management, a strategic financial planning to sustain positive free cash flow. At high level, our strategy will capitalize on our clear competitive advantages in addressable markets of approximately $15 billion that are outlined on slide 11 and 12, and includes three key components. 1. Going deeper into existing accounts 2. Taking advantage of multiple commercial access points across our product portfolio and 3. Leveraging our 7D flash navigation system to drive surge on engagement and build brand loyalty. We are poised to unlock the company's full potential in each of these respective markets with a highly capable team that is ready to execute and deliver on our commitment to discipline, profitable growth by providing a life-changing solution and maximizing value creation. First, referring to spinal implants on slide 13, we believe we are well positioned to serve over 90% of the spine surgeon's needs with a comprehensive product portfolio, which includes spinal hardware, biologics, and enabling technology. We also believe that our comprehensive portfolio and steady cadence of innovation will enable us to attract top sales talent, increase exclusive distributor relationships, and drive stickier relationships with surgeons and hospital accounts, which we expect to resolve in incremental product pull-through as well as ASP lift from mixed benefits. Moving to slide 14, our BGT business is focused on maximizing our number one market position with the most comprehensive portfolio and most indication of bond growth stimulation devices in the market. We will continue to focus on cross-selling with orthopedics and spine, add new market channels with established sales representatives, and drive penetration in the traction market with Axel's team. Our biologics portfolio, featured on slide 15, is growing from a position of strength. We are a market leader with a number two shares position in biologics, with solutions to enhance the fusion process and promote bone repair and growth in each of the major bone grasping categories. Supported by a strong foundation of long-term clinical research, we will continue to leverage opportunities for growth by capturing share with our current biologic offerings in spine and orthopedics. Now, turning to orthopedics on slide 16. We are redefining the category of limb reconstruction with a unique portfolio of solutions that address the most challenging orthopedic conditions in patients of all ages. We are just beginning to expand into the U.S. orthopedics market, which presents incredible growth opportunities given our unique and innovative product lines. Our focus is on areas where we can win, particularly in deformity correction, limb restoration and limb lengthening. We have received recent 510k clearances for a number of products that are now in limited market launch and are expected to capture additional market share including the Fitbonbon transport lengthening nail, the only bond transport nail available in the United States. Finally, as shown on slide 17, we believe that our 7D flash navigation system represents a unique opportunity to drive surgeon and hospital account interest and growth across our broader Orsofix portfolio. The reorganization of our 7D commercial structure under the leadership of our SPINE team is already paying dividends, as evidenced by the record number of 7D earn-out agreements and unit placement in TRIQ. As the world's first radiation-free machine vision image-guided surgical system, 7D continues to revolutionize spinal navigation, making it faster and more efficient. With the capability for registration in mere seconds versus 30 minutes or more for competitive system and requiring no intraoperative radiation, 7D technology is proving compelling to surgeons. While we offer both MIS and open surgery solutions, keep in mind that open surgery still represents approximately 80% of the total current spine interventions, positioning 7D as a key driver of incremental navigated procedure penetration. With the evolution of our 7D strategy, we are more confident than ever in its increasingly significant role in our portfolio. This shift will allow our enabling technologies team to drive software innovation and enhance product integration alongside the R&D pipeline as we launch impactful products across all our franchises. We are highly motivated by the opportunity to differentiate ourselves through the combination of our hardware portfolio with our enabling technology platform system. Surgeons and their patients remain our primary focus, and we will continue to provide a differentiated and unique approach to navigation in the OR. Underpinning our business strategies are significant cross-portfolio commercial opportunities that are highlighted on slide 18. The breadth and depth of orthophic spine and orthopedics offerings provide multiple paths to grow the business as sustained above market rates. For example, we are already taking advantage of opportunities to cross-sell our BGT products into spine accounts, as well as introducing spinal hardware, biologic, and navigation to our spine BGT surgeons. We also have additional opportunities with our biologics and fracture stimulation products through our orthopedics channel. Overall, Orthofix is in a great position to capitalize on our recent product launch successes and deliver meaningful innovation to improve outcomes and efficiencies for our surgeon customers and their patients. We remain the market leaders in bone growth therapies, have a comprehensive market-leading biologics portfolio and differentiated products in several specialized orthopedic markets, such as complex trauma reconstruction and limb deformity correction. Additionally, our broadened spine portfolio is world-class and is fully supported by the highly differentiated and compelling enabling technology. Looking forward, I believe we are uniquely positioned to accelerate our profitable growth engine, which is reflected in our goals for consistent above market growth, improved profitability, and positive free cash flow. As shown on slide 21, we intend to invest in differentiated technologies in areas where we can lead and win with innovation. We will take a systematic approach to driving innovation with rigorous allocation of resources to higher return opportunities. Over the course of our plan, we anticipate investing approximately 8-9% of sales each year in R&D, which we expect to fuel a regular cadence on meaningful, high-impact new product launches and support sustained share capture in our U.S. spine, U.S. orthopedic businesses. Turning to slide 23, we believe we can continue to capitalize on a number of access points that we already have with surgeons to grow the business. For example, we see plenty of opportunity to introduce additional products from our portfolio, such as BGT, Biologics, and 7D, to accounts that already use our spine or orthopedics product. This not only provides us with new entry points and cross-selling opportunities, but also enable us to develop sticky and surger relationships, solidify our presence in the account, and widen our competitive mode. In summary, we have successfully executed and improved our financial and organizational metrics over the last three quarters, and we expect the positive momentum to continue. Our new leadership team and the entire company is well positioned to implement our strategic plan and achieve sustainable, profitable growth across the portfolio. We are on a strong, positive trajectory, and I continue to be optimistic as I look forward. Our new financial targets reflect our confidence in sustainable growth trends and our commercial strategy and execution. I believe we are set up well for a bond market net sales growth, significant EBITDA margin expansion, and improving levels of free cash flow generation in 2025 and beyond. With that, I'll now turn the call over to Julie to review our third-quarter financial results and outline our new financial targets.

Thank you, Mossimo, and good morning, everyone. OrtaFix had a strong third quarter, delivering total company net sales of 196.6 million, or 7%, constant currency top-line growth. Adjusted EBITDA was $19.2 million with adjusted EBITDA margin expansion of approximately $6 million or approximately 250 basis points. I'll now review financial results for the quarter for each of our business units and then discuss our full year 2024 guidance and new 2027 targets. Bone growth therapy's revenue grew 9% to $57.9 million in Q3 and 13% in the BGT fracture market, driven by investments in the fracture market sales channel. This growth was driven by above-market performance in both the spine and fracture channels. We do expect our BGT growth to remain above-market growth rates, but should moderate somewhat as we move forward in the fourth quarter and beyond. Keep in mind that we hold the number one market position with more than 50% market share in our BGT spine business. This unrivaled leadership position, coupled with the impact as we anniversary gains from surgeons acquired in Q3 and Q4 of last year, impacts our ability to maintain the pace of growth that we have been enjoying over the past several quarters. We will continue to focus on adding new surgeons and competitive surgeon conversions in BGT spines. At the same time, we will also continue our commercial focus in the BGT fracture market, where we are significantly less penetrated and see a substantial opportunity to drive new business with orthopedic surgeons. Global Spinal Implants Biologics and Enabling Technologies third quarter revenue was $108.2 million with year-over-year growth of 7%. U.S. spine fixation revenue grew 18%, over three times the market growth rate, driven by deeper penetration of existing accounts and expansion of our customer base. As Massimo said earlier, we entered into a record number of 70 flash navigation system earn-out agreements and matched the record for the highest number of 70 unit placements in any quarter to date. Our U.S. biologics business grew below the overall market in the third quarter as we accelerated our distributor transformation, which had a disproportionate impact on our biologics business. We expect this performance to get back to an above-market pace as we continue to focus on new distributor partnerships, cross-selling initiatives, and the launch of new products such as Osteostrand Plus C and OsteoCo, which were featured at the recent NASS meeting. The global orthopedics business grew 3% in the quarter, led by 15% growth in the U.S., as a result of strong performance across our portfolio, as well as distributor expansion and sales channel investments. The international business declined 2% versus prior year. As we've previously said, due to the nature of this business, particularly around the timing and volume of stocking distributor and tender orders, we expect to see variability from quarter to quarter in the growth rates. Adjusting for non-recurring tender orders, international sales were in line with market growth. Non-GAAP adjusted EBITDA of $19.2 million was driven by the capture of merger-related synergies and driving leverage on sales growth and represented a 45% drop-through on incremental revenue dollars. We remain encouraged by these results as we are seeing the impact of merger-related synergies and our ability to drive leverage on sales growth materialize. From a cash standpoint, our total cash balance, including restricted cash at the end of Q3, increased to approximately $32.6 million. As shown on slide 27, our free cash flow generation was $5.9 million in the quarter, a significant improvement over the first half of this year. This was a result of higher EBITDA, as well as improvements in working capital usage. We also announced today that we successfully completed a new $275 million financing to replace our existing credit facility, which will further optimize the company's capital structure to support long-term profitable growth. Summarized on slide 28, the completion of this refinancing initiative is an important step in Orthofix's trajectory and provides us with more favorable terms and a lower cost of capital under which we can continue to invest in the growth and evolution of the company. Overall, we are pleased with our third quarter results and our performance to date, which has been characterized by steady improvements throughout the year, including significant progress in adjusted EBITDA and becoming free cash flow positive, both of which underpin our confidence in our ability to drive long-term profitable growth. Moving on to 2024 full-year guidance on slide 29, we are maintaining our guidance for full-year net sales of $795 million to $800 million, representing implied growth of 6.6% to 7.2% year-over-year on a constant currency basis. Please note our expectations are based on current foreign exchange rates and do not account for rate changes that may occur through 2024 or contemplate any potential impact to elective procedures as a result of IV fluid shortages or other hurricane-related effects. We are also maintaining our full-year 2024 non-GAAP adjusted EBITDA of $64 million to $69 million and expect to be free cash flow positive for the remainder of 2024. For the remainder of the year, we expect gross margin, operating expenses, depreciation expense, stock-based compensation expense, interest and other expense, and adjusted EBITDA margin improvement to remain in line with the directional remarks we provided on our second quarter call and August. Now I would like to discuss our new three-year financial targets for 2025 through 2027. These are outlined on slide 30. We are still early in our journey focusing on the vital few initiatives Massimo outlined earlier and that we believe will enhance operational excellence and drive business performance. We also have a strong infrastructure in place with plenty of available runway to drive higher margins and profitability across the company. Importantly, we believe these targets build on the positive momentum we've generated and put us on an accelerated path to profitability with a stronger financial profile to maximize value creation. First, we expect to deliver 6% to 7% net sales CAGR from 2025 through 2027. This assumes sustained market demand with weighted average market growth of 4% to 5% that includes a negative pricing impact of 1% to 2% and no material change in the reimbursement or regulatory environment. We expect mid-teens non-GAAP adjusted EBITDA as a percent of net sales for the full year 2027. This assumes approximately 300 basis points of gross margin expansion over the period, capture of about $10 million in remaining merger synergies, fixed cost leverage, and moderating expense growth. We anticipate positive free cash flow generation from 2025 through 2027. This assumes continued adjusted EBITDA improvement, reduction in inventory days on hand, and improved instrument utilization. With a compelling combination of profitable, above-market growth and a stronger financial profile, we believe our focused commercial strategy and broad, differentiated technologies, combined with a robust innovation pipeline and our pace-setting, enabling technologies, position us well to achieve these targets and deliver increased value to our shareholders. Now, before we open up the call for questions, let me turn it back to Massimo for concluding comments. Thank you, Julie.

In closing, I want to express my appreciation to our entire OrthoFix team and our committed commercial partners for their effort in Q3. Their contributions have been instrumental in driving our performance. We have made great progress here today. We've more than tripled the market growth rate in spinal fixation, healthy double-digit growth across all three of our spine franchises, orthopedics-backed contract, strong demand for our enabling technology, commercial transformation that is very well underway and already paying dividends, strengthening our profitability profile and reinforcing our commitment to expanding gross margin, growing adjusted EBITDA, sustaining positive free cash flow and increasing our liquidity at a better cost. I'm confident that building blocks for sustainable, profitable growth and life-changing innovation are in place. We are moving forward as one team and are not letting up on the operational efficiencies and strategic execution it will take to deliver sustainable, profitable growth across our portfolio and drive long-term value for surgeons, patients and shareholders. I am confident we have the people, the technology and the strategies to unlock the company's full potential in each of our respective markets and realize our vision to be the arrival partner in MedTech, delivering exceptional experiences and life-changing solutions. Operator, let's now open the line for questions.

Let's begin the question and answer session. If you'd like to ask a question, press star 1 on your telephone keypad. And if you would like to read your question, simply press star 1 again. If you've called up and asked your question and asked by a loudspeaker, please pick up your handset to make sure that your phone is not on mute when asking your question. And your question comes from Matthew Blackman from T4. Please go ahead.

Good morning, everybody. Can you hear me okay?

We can, Matt.

Great. Thanks for taking the question. I've got three for you, Julie. Just to start, if we think about the key metrics in the LRP, what's going to keep you up most at night between now and 2027? Maybe said another way, where's the biggest list to get to those targets? And then I've got a couple of follow-ups.

Well, Matt, we are confident in our ability to hit these targets. You know, of course, we've always got to work within the market we're working within. So, you know, market growth and what the market is doing will be a key thing that we'll keep our eye on. But we are confident in our ability to deliver our mid-teens adjusted EBITDA and positive free cash flow.

That's a good segue on that mid-teens EBITDA by 2027. Should we think about that as a mile post or a final goal post? I think standalone orthofix got the roughly 20% EBITDA back in the day. Is that still structurally feasible over time? Is that still a structurally feasible target over time?

Yeah, I would view this as a milestone, not a goalpost. Of course, we're not going beyond 2027 in our guidance, and the construct of orthofix is different than, you know, what it was historically when it was at 20%. But we don't believe that, you know, the mid-teens number is a stopping point.

Great. And then my final question, how are you thinking about the magnitude of out-year cash generation? Are you targeting any sort of cash conversion metric? Are you comping yourselves against any of your peers that we should use as a proxy? Just, you know, any sense of how you're thinking about the magnitude of cash generation over the next several years?

Yeah, I think that, I mean, you know, we're looking at it internally in terms of cash conversion. We didn't go out with that as, you know, a metric and a target because we do want to maintain optionality to make strategic investments. If we, you know, need to or feel like it's going to move the needle for us, things like, you know, potentially insourcing manufacturing and those types of things that may come with a little bit higher cash burn. But, you know, that is something we are focused on. And at the right time, we'll provide that as we dial in a little bit more.

All right. Thank you so much.

Sure. Thank you, Matt. Operator, we're ready for the next question.

Ryan Zuberman from IG. Please go ahead.

Hi, everyone. Good morning. This is Izzy on for Ryan. So thank you for taking the questions. I was just hoping to stay on the long-range plan if we can. So just to start out, I was wondering if you guys can talk a little bit about what's going to allow you to sustain above market growth race in each of the segments as we go through the long-range plan?

Sure. Thank you, Izzy, for the question. So I think if you think about where we stand, I'm going to start with Spine, from a market share perspective in the U.S. You know, we are a 3% market share player. With the strength of our portfolio and our enabling technologies, we believe that we have an opportunity to outpace market growth at an accelerated rate. So that's one key. Then as we move to the orthopedics business, we're in a similar position in the U.S. where, you know, the split of the business between international and U.S. is approximately 70% of our business is outside the U.S. And, again, we see an opportunity to focus on limb reconstruction, really creating a segment, and take outside share and create a market within that, within the U.S. orthopedics business. So I would point to those as, you know, two of our key drivers in terms of outgrowing the market and our long-range plan.

Yes, and easy. If you see, we are creating a lot of strength on our P&L, and this will allow us to keep investing in innovation. I think that the platform that we have is becoming pretty wide, And, you know, having 70 as an anchor can make us one of the leading companies on enabling tax. So I think that we have all the building blocks to keep growing above market rates.

Very helpful. Thank you both. And then, Julia, I heard your commentary around the assumptions that are going into the adjusted EBITDA margin expansion. But I was just wondering what the actual drivers will be or if you could provide any more color around that, especially when we consider where the street is currently modeling top-line growth through 2027. What margin levers can you guys pull on to help get to that mid-teens?

Yeah, so, you know, one of the key drivers is gross margin expansion. So, you know, we have opportunity there as the companies came together. You know, there's some friction that we're working through and some opportunities that we have in terms of sourcing our product and distribution that will improve our growth margins over time. We have additional merger-related synergies to capture. And then, you know, finally in terms of we'll have scale on, you know, our G&A costs that will not grow at the same pace of revenue and then leverage overall from our higher revenue number that we'll be able to drop through a higher, you know, a good amount of that incremental revenue to EBITDA.

Thanks for taking the questions.

And your next question comes from Jason Wittes from RAW. Please go ahead.

Hi, thanks for taking the questions and appreciate the long-term guidance here. In terms of 7D, could you kind of give us a sense of who the main customers are for that and how they're using it right now and how you expect they'll be using it in the future?

Yeah, so our main customer, so 7D can be used both in brain and spine, but I think that our major customers are focusing on utilization into spine. 7D has been created at the beginning to be used on open surgery, and remember, open surgery represents right now still 80% of the full market, But we are doing a lot of progress also on developing our MIS solution, which is giving us the opportunity to create a footprint on the ASC. So from the market penetration perspective, you see the demand. The demand keeps increasing because the way our 7D can be utilized keeps increasing. In the future, and we're going to, as I said, we're going to be focused on keep developing our synergistic approach between implant and 7D to be used in deformity. And deformity is going to be one of the key drivers for our expansion into spine. And we can do proprietary things that we're going to talk about in the future that are going to create a uniqueness around the opportunity of 7D. But overall, we are very pleased about the demand that we're seeing today, mostly driven by the fact that there's an actual utilization of the device in the OR. So you save time, you know, like the ability to have a registration done in less than a minute is very important, especially in a moment where time in the OR, the OR utilization is pivotal for many solutions. So, again, very pleased about where we are with the platform, and this is just the beginning for us.

Oh, great. Okay, thank you. And the question for Julie, if I heard correctly, you mentioned guidance is exclusive of hurricane and IV shortage impact. Did I hear that correctly? And related to that, do we expect any impact from those items?

Yes, you did hear that correctly. And at this point, we're not seeing any impact from those items.

Okay, thanks for the clarification. And then maybe another clarification. I guess I have no doubt you guys can grow above market growth, especially in spinal implants. Did you specify kind of where you think your growth might land? I mean, clearly above market, I think that's almost a given, given your portfolio and your position, et cetera. But did you specify kind of where you think it might land relative to that sort of 3% to 4% market growth, which is kind of the normalized growth?

yes uh jason we said six to seven percent okay for your time period yeah okay thank you again

for that clarification okay thank you again appreciate the uh the guidance the or the the um the outlook for 2027 i'll jump back and cue thanks jason operator we're ready for the next

question there are no further questions at this time i would like to turn the call back over to Julie Dewey for Closing Commons. Please go ahead.

Thanks, everybody, for joining us today. We appreciate your time and interest. If you have more questions, please reach out, and we'll look forward to talking to you next quarter. This concludes our call.

Ladies and gentlemen, thank you all for joining, and that concludes today's conference call. You may now disconnect.